Credit on air tickets and tour

[Ganeshan Kalyani]

Dear Sir,

I would like to discuss that in general course of business the associate of the company travel abroad for business meeting, exhibition etc. The travel agent is doing the booking for air fare and plan for hotels and stay. The travel agent raises bill on the company with service charge and service tax. Whether the service tax on bill can be claimed as cenvat credit. Whether the same can be issued by way of Input Service Distribution (ISD). Kindly through some light in the discussion.

regards,

ganeshan

[MUKUND THAKKAR]

Dear Ganesh

your problem is like that how to define amount for passing credit thru ISD, input service distribution on based of your turn over, according to me which ever your unit turnover is highest please pass on to them.

[YAGAY and SUN]

Dear Ganeshan,

Please go through the Rule 7 (as amended in the budget) of the CENVAT credit Rules, 2004, thoroughly and act accordingly to distribute the CENVAT credit as per the procedure mention in the said rules.

Regards

YAGAY and SUN

(Management, Business and Indirect Tax Consultants)

[Ravi Kumar Somani]

CENVAT credit can be claimed for the travelling expenses provided output service is taxable and if nexus can be proved that such input services are having nexus with the taxable output service.

AI Summary

CENVAT credit on travel agent services may be claimed if nexus with taxable output services exists.
Service tax paid to travel agents on air tickets and related arrangements can be claimed as CENVAT credit only if there is a taxable output service and a proved nexus between the input service and that output. Alternatively, the input tax may be allocated via Input Service Distribution (ISD) in accordance with the procedural requirements of Rule 7 of the CENVAT Credit Rules, with practical allocations sometimes made to the unit with the highest turnover.